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Understanding the membership structure of your business is essential to correctly forming an LLC.  Owners of a Limited Liability Company are called members.  The members of your LLC will need to be identified on your articles of organization, which is the paperwork required to form an LLC with the state.  After filing the articles, in order to best protect your business and personal assets, you may consider creating an operating agreement for your LLC, which should identify the members along with the rights and responsibilities of each person.  

What is an LLC?

An LLC is different from a sole proprietorship or partnership as it separates the owner’s personal and business assets.

Learn more about what forming an LLC means to your business.

Who can be a member of an LLC?

Many states do not impose strict limitations on who may act as members of an LLC.  In most states, members must be at least 18 years old, but there is no citizenship requirement.  In fact, entities, such as trusts, corporations, or other LLCs, can also operate as members of an LLC, as well as individuals.    

As owners, members can stipulate the extent of their involvement in management of the LLC.  Members with a more hands-on role in day-to-day management of the company will take on such tasks as negotiating and executing contracts and supervising company employees (known as a member-managed LLC).  Members may also be investors only and choose not to handle any of the day-to-day responsibilities and hire a manager to operate the business (known as a manager-managed LLC). Read more about the differences between a member-managed and manager managed LLC.

Single Member vs. Multiple Member LLCs 

A single-member LLC has only one member (owner) and is solely controlled by this member.  A multi-member LLC has two or more members who all share control of the company.  While most important for a multi-member LLC structure, you should have an operating agreement in place, even though it’s not required in most states.  If you establish a multi-member structure, this agreement is used to document particular instructions for handling important events throughout the life of the LLC, such as a member’s death or withdrawal, dissolution of the company, and resolution for disagreement between members.  

How to change a Single-Member LLC to a Multiple-Member LLC

In order to become a multi-member LLC, you simply add another member.  Some rules may apply when adding to the LLC’s membership depending on the state and/or wording in the operating agreement.

How many members can an LLC have?

LLCs must have at least one member, but there is usually no restriction on the maximum number of members.    There is only a restriction on the number of members if your LLC is set up to be taxed as an “S-Corp”.  An S-Corp or S Corporation is a federal tax election by filing IRS Form 2553 that you can make with the IRS which may lower the member’s personal tax liability.  Making this election changes the tax status of your existing LLC and limits the membership to 100 members

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